Things From the ECB News Conference

European Central Bank President Mario Draghi drove home his message that the governing council is prepared to provide additional stimulus to raise inflation to its target, and probably as soon as December, when it next meets. His very dovish comments succeeded in driving the euro lower, which will help boost inflation, and also raised a range of asset prices on financial markets. The resistance that appeared to be building to an expansion of the central bank’s bond-buying program among national central bank heads appears to have evaporated in Malta, and Mr. Draghi even said that a further cut in the already-negative deposit rate was under consideration. here are five takeaways from the news conference.

The ECB announced the launch of QE immediately after figures were released showing consumer prices had fallen from a year earlier. Following its actual launch in March, the inflation rate picked up modestly, but has since slipped back, and in September, consumer prices were once again in decline. As before, the central bank’s response to falling prices appears likely to be prompt, with Mr. Draghi linking the buildup of downside risks to the inflation outlook to a need for a “re-examination” of the degree of stimulus at the governing council’s December meeting.

The ECB HQ in Frankfurt

One of the major surprises in the news conference was the support Mr. Draghi seems to have secured for a reconsideration of a range of stimulus measures. Ahead of the Malta meeting, a number of national central bank heads had expressed resistance to doing that soon. But that resistance appears to have been overcome, which the governing council backing an extremely dovish opening statement by Mr. Draghi.

The other big surprise from the news conference is that a cut in the already negative deposit rate is one of the options governing council members will consider in December. That would mean that banks would pay even more to keep funds on deposit at the ECB. Mr. Draghi had previously indicated that rates could fall no further, but as he said in the news conference, circumstances have changed.

The ECB Meeting Was Held in Malta

One of the immediate impacts QE was supposed to have on the eurozone economy was through a weakening of the euro. That was supposed to boost exports, and inflation by pushing up the price of imports. But the euro has strengthened in recent months, and Mr. Draghi wasn’t pleased, noting that was one of a series of “downside risks” to the growth and inflation outlook. Needless to say, by the time Mr. Draghi had finished, the euro had surrendered some of its recent gains.

If the ECB does deliver on a strong hint of further stimulus at its December meeting, it will do so two weeks before U.S. policy makers hold their final meeting in a year when many expected to see the first rise in short-term interest rates since the financial crisis. Unlike most recent news conferences, this one didn’t feature a reference by Mr. Draghi to the prospect of “divergent monetary policies,” perhaps an indication that the ECB doesn’t expect to see much action from the Fed soon.